Question

Using the consumption function: ć = ć + b(y), calculate saving at income of rs 2000 crore, if autonomous consumption is rs 150 crore and 40% of additional income is consumed? Answer

Answer 1

Answer:

At income level Rs. 2,000 crores,

Consumption= 150 + 0.4 * 2,000

= 150+ 800

= Rs. 950 crores

Savings= Income- Consumption= 2,000- 950 = Rs. 1050 crores.